Investing Flashcards
_______ are interest- bearing, negotiable certificates of long-term debt. (________)
Bonds, loan
_______ are shares of ownership in a business corporation’s assets and earnings. (________)
Stocks, own
_______ pool the invested funds of many investors and use them to invest in a diversified portfolio. (includes _____________)
Mutual funds, stocks and/or bonds
______________
◦ Low risk, low reward
US Government Bonds
______________
◦ Some risk, some reward
◦ No federal taxes; and if purchased in same state you reside, no state tax
Municipal Bonds
______________
◦ Higher risk, higher reward
◦ Will pay tax
Corporate Bonds
___________ is the process of spreading your assets among several different types to lessen risk.
Asset allocation
___________ provides a measure of safety and reduces risk because a loss in one type may be offset by gains from others.
Diversification
___________ plans are retirement plans that are funded, at least in part, by an employer.
Employer pension
___________ plans are provided by a
local, state, or federal government.
Public pension
___________ plans are set up by individuals and are especially important to self-employed people and other workers who are not covered by employer pension plans
Personal retirement
___________ are contracts purchased from an insurance company that provide for a sum of money to be paid to a person at regular intervals for a certain number of
years or for life.
Annuities
Four major sources of retirement income:
Employer pension, public pension, personal retirement, annuities